Conditional Donation Trust Agreements (CDTA)

Conditional Donation Trust Agreement

Since at least 1994, the Office of the Secretary and Treasurer and by the Planned Giving Desk of the Watch Tower Bible & Tract Society of Pennsylvania have created a booklet to harvest donations from Jehovah’s Witnesses in the United States. This booklet includes many options that Jehovah’s Witnesses can avail of to donate to the organization. One of those options was introduced in the year 2000 as Conditional Donations and since 2005, it is referred to as Conditional Donation Trust Arrangement (CDTA).

What is a CDTA and how does it work? What must one do to set up such an arrangement? Do such arrangements still exist? Are CDTAs legal outside the United States? Why were the funds in CDTAs moved outside the USA?

What is a CDTA and how to they work?

Charitable Planning to Benefit Kingdom Service Worldwide, (2000 edition), described Conditional Donations this way:

During your lifetime you may give money to the Society [Watch Tower] under a conditional arrangement. This means that if you or a designated beneficiary (such as your spouse) has a financial need and makes a written request, the money can be returned. This kind of donation meets the wishes of many.

Such an arrangement ensures that the gift becomes the property of the Society in the event of the deaths of you and any other beneficiary and that the expense, time, and uncertainties of probate are avoided.

Because this arrangement leaves you free to request return of the money, there is no charitable income tax deduction.

Please write to the Office of the Secretary and Treasure, as outlined on page 29.

Charitable Planning to Benefit Kingdom Service Worldwide, (2000 edition), p. 11

On pages 12 & 13 of Charitable Planning to Benefit Kingdom Service Worldwide (2010 edition), they made a few clarifications. They renamed it as Conditional Donation Trust Arrangement. In the revised edition, it was made clear that Watch Tower Bible & Tract Society of Pennsylvania cares for such donations and that such donations become the property of Watch Tower Bible & Tract Society of Pennsylvania upon the death of the donor, if a request for return of such donations was not put in writing prior to the donor’s death. They included one additional advantage for availing of this arrangement: “At donor’s death, gift is deductible for estate and inheritance tax purposes”.

What must one do to set up a Conditional Donation Trust Agreement?

A potential donor must write to the Charitable Planning Office at Watch Tower Bible & Tract Society of Pennsylvania, 100 Watchtower Drive, Patterson, New York 12563-9204 requesting further information.

The donor then receives a Conditional Donation Arrangement Information Letter and a copy of the brochure entitled, Charitable Planning to Benefit Kingdom Service Worldwide. This informational letter makes some interesting points, as listed below:

  • The Trustee (Watch Tower Bible & Tract Society of Pennsylvania) will not enter a CDTA for amounts less than $5000.
  • The Trustee will not enter a CDTA for more than $5000 if the grantor (donor) intends to ask for the money back in less than a year.
  • Unless the grantor is made up of a husband and wife, each CDTA may have only one grantor.
  • In community property States, a spouse must also sign the agreement even if he or she is not a grantor.
  • Only an individual who is a US citizen or resident for tax purposes may establish a CDTA. A corporation or other legal entity may not establish a CDTA.
  • The grantor is entitled to revoke all or a portion of the donation by making such a request in writing to the trustee. Such requests may only be made once every 3 months.
  • The grantor receives no income from the donation. The trustee receives all income. Therefore, any gains from the donation remain with Watch Tower Bible & Tract Society of Pennsylvania.
  • The trustee will attempt to return $10,000 or less within 10 days to the grantor, but it may take up to four months from the time they receive the revocation request to return all funds requested.
  • The funds will only be returned to the grantor (or co-granters if husband and wife) but will not be returned to any other persons.
  • If the CDTA is not revoked before the death of the grantor, the funds in the trust become the property of Watch Tower Bible & Tract Society of Pennsylvania.
  • The main purpose of the funds is to advance the worldwide work of Jehovah’s Witnesses.
  • Watch Tower Bible and Tract Society of Pennsylvania may loan the money in the trust, with or without interest, to any corporation that:
    • is used by the Governing Body of Jehovah’s Witnesses to effect the work of Jehovah’s Witnesses
    • is exempt from federal income taxes under section 501(c)(3) of the Internal Revenue Code.
  • Such powers of the trustee are to be construed broadly and the trustee has permitted itself to commingle such assets with other such agreements for purposes of management and investment.
  • The amount of the CDTA is kept on record and a letter is sent to the grantor acknowledging any funds sent to or returned from the CDTA.
  • The CDTA is not tax deductible. Legally, they remain assets of the grantor.

In block capitals, the information letter contains this statement:

THIS IS NOT LEGAL ADVICE. YOU SHOULD SEEK THE ADVICE OF A QUALIFIED ESTATE AND/OR TAX PROFESSIONAL TO DETERMINE THE CONSEQUENCES AND ADVISABILITY OF YOUR ENTERING INTO A CDTA.

Conditional Donation Arrangement Information Letter, page 2.

The above statement is good legal and financial advice. You would expect that the Watch Tower would always ensure that their donors would seek such advice before entering any legally binding agreements with them. However, that is not the case, as you will see later on in this article.

Do Conditional Donation Trust Arrangements still exist?

The short answer is yes, but such CDTAs are no longer submitted to Watch Tower Bible and Tract Society of Pennsylvania, and the CDTAs no longer have the legal protections that were governed by United States Federal Law.

In the Conditional Donation Trust Agreement set up under United States Federal Law, the grantor had legal protections to ensure that their legal rights are protected should a dispute arise between the grantor (the donor) or the trustee (Watch Tower Bible and Tract Society of Pennsylvania).

In May 2018, the Watch Tower Bible & Tract Society of Pennsylvania, with an address at 625 Red Mills Road, Wallkill, New York, said in a letter to those donors who availed of the CDTA, that their “existing Conditional Donation Trust Arrangement will be replaced with a new arrangement”.

The new arrangement is “to transfer the funds you currently have in your Conditional Donation account to a similar arrangement with the legal entity used by the Central Europe branch known as Jehovas Zeugen in Deutschland (Jehovah’s Witnesses in Germany).”

The justification for the transfer of the funds was that “funds in the current arrangement may be restricted. However, under the new arrangement, they can be used in more countries and provide just what our brothers and sisters need at the right time.”

They do not explain what those restrictions might be. Furthermore, and suspiciously, this explanation contradicts what is said in the original agreement. It explicitly stated that the funds were to advance the worldwide work of Jehovah’s Witnesses and that the money could be loaned to any corporation used by the Governing Body of Jehovah’s Witnesses.

The wording intentionally deceives the reader into thinking that the money needs to go to Germany for it to be used outside the United States. This is not true. It’s categorically false. There is no law in the United States that prevents a church from using their funds to further their interests in foreign lands.

Are CDTAs legal outside the United States?

Conditional Donation Trust Arrangements are legally recognized only in the United States. If such arrangements are set up in countries outside the United States, those countries have no laws protecting your assets. However, and this is very important to note, any conditional donation a US citizen makes to an entity in a foreign country is not tax deductible. So, not only do you have no legal protection should you request your money back, you remain liable for tax on that money.

When Watch Tower wrote to CDTA donors, they did give them the option to have the balance of their CDTA returned in whole or in part, should they “prefer not to to take advantage of this new arrangement”. The letter also suggested that they “may wish to direct us to distribute all or part of the balance as an outright donation to the Watchtower Bible and Tract Society of New York, Inc.”

What was missing from this letter that was found in the original legally binding arrangement letter was these words in block capital:

THIS IS NOT LEGAL ADVICE. YOU SHOULD SEEK THE ADVICE OF A QUALIFIED ESTATE AND/OR TAX PROFESSIONAL TO DETERMINE THE CONSEQUENCES AND ADVISABILITY OF YOUR ENTERING INTO A CDTA.

Why would Watch Tower Bible and Tract Society of Pennsylvania omit this statement? Isn’t it a legal requirement to include such statements when someone enters a legal agreement with a legal entity? Yes, but there is no legal basis for this new “similar” arrangement. In the Donation Agreement letters provided by Jehovas Zeugen in Deutschland (JZD), they make this admission:

Jehovas Zeugen in Deutschland (JZD) can give you a Bible-based promise to return the donation in whole or in part – in case of need of the donor (Ecclesiastes 9:11) – which is not a legal promise that falls within the state’s jurisdiction nor is enforceable in court. Such a promise is given on the basis of confidence that Jehovah’s organization and its religious corporations all prove themselves faithful. – James 5:12; Matthew 5:33-37.

Donation Agreement, page 1.

In other words, donors have no legal recourse. They must rely completely on the honesty and good will of the German branch to give them back their money if they request it because according to German law such donations must be considered outright donations.

Prior to signing the Donation Agreement application, the donors should make note of point 2 where it says, “The following promise (No.3) does not represent a legal claim, in the sense of a constitutional law, but is a promise solely according to the Bible-based religious law.”

See also point 6, where is says that “the promise to pay back does not represent a legal claim, it is neither transferable nor leviable, nor hereditary, and cannot be made valid by governmental jurisdiction. If the donor(s) states his waiver or dies, then the promise to pay back is inapplicable.”

Why were the funds in CDTAs moved outside the USA?

In recent years, the Watch Tower has been moving a lot of its financial assets to Germany. There may be a number of reasons for this. Some of the reasons we provide are merely speculative until we receive documented evidence confirming or contradicting these claims.

Declaration of Assets

In Germany, there is no requirement for government-approved churches to declare their assets. All money sent to Jehovas Zeugen from entities operated by Jehovah’s Witnesses goes straight into a black hole. We have no idea how much money is held there but we believe it is a lot. For example, in Australia, UK, and Ireland, they hold only enough money on hand to cover operating expenses. All excess money is sent overseas to Germany, under the term, “Making donations to further religious education overseas” or “Making donations to further religious education“, or Donations and Overseas Aid. If Branches around the world are already sending much of their money to Germany, and now all the CDTA funds are sent to Germany, there is clearly a huge amount of money owned by Jehovah’s Witnesses in a German bank.

Child Sexual Abuse claims

There are an increasing number of cases of child sexual abuse being levelled against the Jehovah’s Witnesses. There are claims being made in many countries, including but not limited to, Australia, Belgium, Brazil, Canada, Netherlands, United Kingdom, and United States. If the Jehovah’s Witnesses are sending most of their money to Germany under the guise of “religious education” or “overseas aid”, then they can claim that they have little or nothing to pay out to victims or survivors of sexual abuse when it is proven in court that they were negligent or maliciously negligent in their duty of care to protect children.

We are still left with the question: What was the real reason for moving the CDTA funds from the USA to Germany? There is no US law preventing US churches from distributing funds internationally to help the brothers and sisters worldwide. Why, then, did the Watch Tower deceive their CDTA donors? Right now, we are not fully certain but we expect that as Watch Tower is dragged into more courts on the issue of child sexual abuse, and is ordered to make payments, we expect the truth to reveal itself.

Steps to Counter Financial Fraud

If it is true that Watch Tower are sending money to Germany to hide how much money they really have, and to limit their liability in claims levelled against them, we would call on the German Government to make the churches in their country financially transparent. It will ensure there is no financial irregularities or fraud being committed by religious organizations. It would ensure too that money is not being concealed so as to prevent victims of crimes getting justice, and adequate compensation, from religious organizations who have been held legally responsible for crimes permitted against their members’ children.

Documents listed in this article

  1. Planned Giving to Benefit Kingdom Service Worldwide (1994)
  2. Charitable Planning to Benefit Kingdom Service Worldwide (2000)
  3. Charitable Planning to Benefit Kingdom Service Worldwide (2010)
  4. Conditional Donation Arrangement Information Letter (2005)
  5. Conditional Donation Trust Agreement with Watch Tower Bible & Tract Society of Pennsylvania (2005) Redacted
  6. CDTA Donation Confirmation Letter (2018)
  7. Conditional Donation Trust Agreement with Jehovas Zeugen in Deutschland (2018)
  8. Watchtower Bible & Tract Society of Australia Statement of Profit or Loss & Other Comprehensive Income (2018)
  9. Watch Tower Bible & Tract Society of Britain Financial Statements for the Year Ended 31st August 2018 (2018)
  10. Watch Tower Bible & Tract Society of Ireland Financial Statements for the Year Ended 31st August 2018 (2018)
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